Despite a range of domestic economic challenges and escalating trade tensions with the United States, China has set an ambitious growth target of around 5% for 2025.
This figure, announced in the country’s annual government report, reflects Beijing’s determination to stabilize its economy amidst growing headwinds, including trade disputes with the US, and persistent issues in domestic sectors such as consumption and the property market.
The new target marks the third consecutive year that China has set the same growth goal, underscoring its ongoing struggle to maintain economic momentum after the COVID-19 pandemic and the deepening property crisis. Premier Li Qiang presented the country’s goals at the National People’s Congress, where he outlined plans for fiscal and monetary stimulus aimed at boosting growth.
Despite these efforts, the Chinese economy faces considerable hurdles. Consumption has remained sluggish, largely due to the prolonged property crisis and a lack of significant government support for ordinary consumers. Unemployment also remains a persistent concern, as does the looming threat posed by the US’s aggressive trade policies under the leadership of former President Donald Trump.
This year, US tariffs on Chinese imports have reached a new high of 20%, with further hikes looming. These tariffs are a major concern for China’s export-driven economy, as they not only threaten the revenue from exports to the US but also disrupt supply chains and stifle foreign investment. Analysts warn that the tariffs could significantly lower China’s growth projections, with some estimating that the tariffs could shave off 2% from the country’s GDP growth in the worst-case scenario.
China’s response has been firm, with retaliatory measures against US agricultural products and key American businesses. Beijing has made it clear that it is prepared for an extended economic battle and will take whatever steps necessary to minimize the impact of the tariffs on its economy. As part of this strategy, China has also focused on promoting technological innovation, with a strong emphasis on industries like artificial intelligence, green energy, and high-tech manufacturing.
To counter the economic drag caused by trade disruptions, China has committed to boosting domestic demand, including measures to increase household consumption and consumer confidence. Special treasury bonds worth 1.3 trillion yuan and local government bonds for infrastructure projects are part of this effort, signaling that the government is prepared to increase public debt to stimulate growth.
Moreover, fiscal stimulus will focus on creating jobs, supporting high-tech industries, and stabilizing the property market. The government has set an unemployment target of 5.5% for 2025, and it plans to expand its elderly care programs to address the needs of its aging population.
While China’s growth target of 5% is seen as ambitious given the current economic landscape, it also reflects the country’s resilience and determination to overcome the challenges posed by US tariffs and the global economic slowdown. Experts have pointed out that China may need to adopt further stimulus measures, particularly to stabilize the housing market and ensure that domestic consumption rises in line with the government’s ambitions.
The Financial Times, the New York Times, Bloomberg, and BBC contributed to this report.
